Nuclear - The President mentioned nuclear as an option for clean energy and because of its low carbon emissions, the fossil fuel alternative could be a major beneficiary. Investors can play the Market Vectors Nuclear Energy ETF (NLR), which invests in uranium miners, nuclear power generators, and nuclear plant builders around the globe. If investors want exposure to the uranium that will be needed for expanded nuclear power plants in the US my choice is Cameco (CCJ). Cameco, based in Canada, is the largest uranium miner in the world.
Clean Coal/Natural Gas - More clean energy alternatives include two commodities the US has an abundance of, coal and natural gas. The problem with coal is the carbon emissions, but a clean burning coal process could be the answer. Fuel Tech (FTEK) has a clean coal burning process. Or investors can capture the entire coal sector with the Market Vectors Coal ETF (KOL). As far as natural gas, there is the First Trust Natural Gas ETF (FCG) that invests in a basket of natural gas stocks.
Offshore Drillers - Offshore drilling was mentioned last night and I am very happy to hear it out of the President’s mouth. With potentially large amounts of oil off the shores of the US the money pouring into the drilling stocks will increase dramatically. A name that could benefit is Transocean (RIG). There is also an ETF with heavy concentration on the drillers and service companies, the iShares DJ US Oil Equipment & Services ETF (IEZ).
Regional Banks - The proposal to take $30 billion of the TARP money that was paid back by the large banks and pass it to the community banks will obviously benefit the smaller financials. Instead of trying to pick one of the many regional banks, buy the iShares US Regional Banks ETF (IAT).
Wall Street - The rhetoric against Wall Street and big banking continued in the SOTU speech and it does not appear to be letting up anytime soon because it is a popular view among Americans. Whether you agree with it or not is irrelevant, the bottom line is that there is an added risk when buying into large-cap stocks with ties to Wall Street.
Carbon Emitters - A mention of the cap and trade bill made its way into the speech along with several references to clean energy. That suggest the companies that emit large amounts of carbon will be targeted by the government. Think large manufacturing, traditional coal burning power plants, and certain areas within big oil.
Disclosure: Long KOL and FCG.